CHANGE IN CONTROL AND NON-COMPETITION AGREEMENT



         THIS AGREEMENT is made effective as of October 19, 2002 by and among
     Harbor Federal Savings Bank (the "Bank"), Harbor Florida Bancshares, Inc.
     ("Bancshares" or the "Holding Company") and H. Michael Callahan (the
     "Executive").

         WHEREAS, the Bank recognizes the substantial contribution Executive
     makes to the Bank and wishes to protect Executive's position therewith for
     the period provided in this Agreement: and

         WHEREAS, the Executive acknowledges that he will become familiar with
     confidential and proprietary information of the Bank and Bancshares in the
     course of his employment duties: and

         WHEREAS, the Executive has been elected to, and has agreed to serve in
     the position of Senior Vice President for the Bank, a position of
     substantial responsibility: and

         NOW, THEREFORE, in consideration of the contribution and
     responsibilities of Executive, and upon the other terms and conditions
     hereinafter provided, the parties hereto agree as follows:

1.       GENERAL.
         --------

         Employee is, except as described in Section 4, an employee at will and
     serves at the  pleasure  of the Chief  Executive  Officer  and the Board of
     Directors of the Bank (the "Board").

2.       TERM OF AGREEMENT.
         ------------------

         The term of this  Agreement  shall commence as of the date first above
     written and shall  continue for a period of two (2) year and sic (6) months
     thereafter. Commencing on or before April 19, 2003 and continuing each year
     thereafter, the Board may extend this Agreement for an additional year. The
     Board will review the Agreement and the  Executive's  performance  annually
     for  purposes  of  determining  whether  to extend the  Agreement,  and the
     results thereof shall be included in the minutes of the Board's meeting.

3.       PAYMENTS TO EXECUTIVE UPON CHANGE IN CONTROL.
         ---------------------------------------------

         (a) Upon the occurrence of a Change in Control (as herein  defined) of
     the Bank,  or  Bancshares,  followed  at any time  within one (1) year of a
     Change in Control, and during the term of this Agreement,  by the voluntary
     or involuntary termination of Executive's employment,  other than for Cause
     as defined in Section 3(c) hereof, the provisions of Section 4 shall apply.
     Upon the occurrence of a Change in Control,  Executive shall have the right
     to elect to  voluntarily  terminate  his  employment at any time during the
     term of this  Agreement  following any demotion,  loss of title,  office or
     significant authority,  reduction in his annual compensation, or relocation
     of his  principal  place  of  employment  by more  than 50  miles  from its
     location immediately prior to the Change in Control.

         (b) For purposes of this Agreement,  a "Change in Control" of the Bank
     or the Holding  Company  shall mean (a) merger or  consolidation  where the
     Bank  or  the  Holding  Company  is  not  the   consolidated  or  surviving
     association,  (b) transfer of all or substantially all of the assets of the
     Bank or the Holding  Company,  (c) voluntary or involuntary  dissolution of
     the Bank or the Holding  Company or (d) change in control as defined  under
     the  Change  in Bank  Control  Act of  1978.  The  surviving  or  resulting
     association,  the transferee of Bank's or the Holding  Company's  assets or
     the control person shall be bound by and have the benefit of the provisions
     of the Agreement and the Bank or the Holding Company shall take all actions
     necessary to insure that such association,  transferee or control person is
     bound by the provisions of this Agreement.

         (c) Executive shall not have the right to receive termination benefits
     pursuant  to  Section  4  hereof  upon  Termination  for  Cause.  The  term
     "Termination for Cause" shall mean  termination  because of the Executive's
     personal  dishonesty,  incompetence,  willful  misconduct,  any  breach  of
     fiduciary duty involving  personal profit,  intentional  failure to perform
     stated duties,  willful  violation of any law,  rule, or regulation  (other
     than traffic  violations  or similar  offenses)  or final  cease-and-desist
     order, or material breach of any material  provision of this Agreement.  In
     determining  incompetence,  the acts or omissions shall be measured against
     standards generally prevailing in the banking industry. Notwithstanding the
     foregoing,  Executive shall not be deemed to have been Terminated for Cause
     unless  and  until  there  shall  have  been  delivered  to him a copy of a
     resolution duly adopted by the affirmative vote of not less than a majority
     of the Board of  Directors of the Bank at a meeting of the Board called and
     held for that purpose  (after  reasonable  notice to the  Executive  and an
     opportunity for him, together with counsel, to be heard before the Board at
     such  meeting  and which such  meeting  shall be held not more than 30 days
     from the date of notice during which period Executive may be suspended with
     pay),  finding that in the good faith  opinion of the Board,  the Executive
     was guilty of conduct justifying Termination for Cause.



4.       TERMINATION BENEFITS.
         ---------------------

         (a) Upon the  occurrence of a Change of Control,  followed at any time
     during  the  term  of  this  Agreement  by  the  voluntary  or  involuntary
     termination of the Executive's  employment,  other than for Termination for
     Cause, the Bank and the company shall pay the Executive, or in the event of
     his subsequent death, his beneficiary or  beneficiaries,  or his estate, as
     the case may be, as severance  pay or  liquidated  damages,  or both, a sum
     equal to his then current annual  salary.  At the election of the Executive
     such  payment  may  be  made  in a  lump  sum  or  paid  in  equal  monthly
     installments  during the  twelve  (12)  months  following  the  Executive's
     termination.  In the  event  that  no  election  is  made,  payment  to the
     Executive will be in equal monthly installments.

         (b) Upon the  occurrence  of a Change  of  Control  of the Bank or the
     Holding  Company  followed at any time during the term of this Agreement by
     the Executive's voluntary or involuntary  termination of employment,  other
     than for Termination for Cause,  the Bank shall cause to be continued life,
     medical,  dental and  disability  coverage  substantially  identical to the
     coverage  maintained by the Bank for the Executive  prior to his severance,
     except to the extent such coverage may be changed in its application to all
     Bank employees.  Such coverage and payments shall cease upon the earlier of
     the  expiration  of twelve (12)  months or the  Executive  obtaining  other
     coverage.

         (c) At the effective date of this Agreement, and annually on April 19,
     Executive  shall make the election  referred to in Section 4(a) hereof with
     respect to whether the amounts  payable  under said  Section  4(a) shall be
     paid  in a  lump  sum  or  on a  monthly  basis.  Such  election  shall  be
     irrevocable for the year for which such election is made and shall continue
     in effect until the executive has made his next annual election.

         (d) Notwithstanding the preceding  paragraphs of this Section 4, in no
     event  shall the  aggregate  payments or benefits to be made or afforded to
     Executive under said paragraphs (the "Termination  Benefits") constitute an
     "excess parachute  payment" under Section 280G of the code or any successor
     thereto,  and in order to avoid such a result Termination  Benefits will be
     reduced,  if necessary,  to an amount (the  "Non-Triggering  Amount"),  the
     value of which is one dollar ($1.00) less than an amount equal to three (3)
     times  Executive's  "base  amount",  as determined in accordance  with said
     Section 280G.  The  allocation of the reduction  required  hereby among the
     Termination Benefits provided by the preceding paragraphs of this Section 4
     shall be determined by the Executive.

5.       NOTICE OF TERMINATION.
         ----------------------

         (a) Any  purported  termination  by the Bank or by Executive  shall be
     communicated  by Notice of  Termination to the other parties  thereto.  For
     purposes of this Agreement,  a "Notice of Termination" shall mean a written
     notice  which shall  indicate the  specific  termination  provision in this
     Agreement  relied upon and shall set forth in  reasonable  detail the facts
     and circumstances claimed to provide a basis for termination of Executive's
     employment under the provision so indicated.

         (b) "Date of Termination"  shall mean the date specified in the Notice
     of Termination  which, in the instance of Termination  for Cause,  shall be
     immediate.


6.       SOURCE OF PAYMENTS.
         -------------------

         It is  intended by the parties  hereto that all  payments  provided in
     this Agreement shall be paid in cash or check from the general funds of the
     Bank. The Holding Company, however, guarantees payment and provision of all
     amounts and benefits due  hereunder to the  Executive,  and if such amounts
     and benefits due from the Bank are not timely paid or provided by the Bank,
     such amounts and benefits shall be paid or provided by the Holding Company.

7.       NON-COMPETITION AND CONFIDENTIAL INFORMATION
         --------------------------------------------

         (a) During the term of this Agreement,  and for one (1) year after the
     date  the  Executive  is  terminated  by the  Bank or  Bancshares,  whether
     voluntarily or  involuntarily,  with or without cause,  the Executive shall
     not compete  directly or indirectly  in the Florida  counties of St. Lucie,
     Martin, Indian River,  Brevard,  Volusia or Okeechobee  (collectively,  the
     "Counties")  with  any  business  then  being  conducted  by  the  Bank  or
     Bancshares  without their prior written  consent.  The term "compete" means
     rendering any service by the Executive,  whether as an employee,  director,
     consultant,   independent  contractor,  partner,  co-venturer  or  investor
     (excluding  any interest of the  Executive  through  investment of up to an
     aggregate of 10% in the equity or debt securities or equivalent partnership
     interest  of any person  required to register  under  Section  12(g) of the
     securities  Exchange  Act of 1934)  to or on  behalf  of any  organization,
     including but not limited to any commercial bank, savings bank, savings and
     loan association, credit union, mortgage banking company, insurance company
     or brokerage firm,  conducting any business then competitive to that of the
     Bank or Bancshares in the Counties.

         (b) The  Executive  acknowledges  that  during his  employment  he has
     learned,  will  learn and will  have  access  to  confidential  information
     regarding  Bancshares  or the  Bank and its  customers  and  business.  The
     Executive  agrees and  covenants not to disclose or use for his own benefit
     or the benefit of any person or entity with which he may be associated  any
     confidential information unless or until the Bank or Bancshares consents to
     such disclosure or use of such information  becomes common knowledge in the
     industry or otherwise legally in the public domain.

8.       MODIFICATION AND WAIVER.
         ------------------------

         (a)  This  Agreement  may not be  modified  or  amended  except  by an
     instrument in writing signed by the parties hereto.

         (b) No term or  condition  of this  Agreement  shall be deemed to have
     been waived, nor shall there be any estoppel against the enforcement of any
     provision  of this  Agreement,  except by written  instrument  of the party
     charged  with such waiver or  estoppel.  No such  written  waiver  shall be
     deemed a continuing  waiver unless  specifically  stated therein,  and each
     such waiver shall operate only as to the specific term or condition for the
     future or as to any act other than that specifically waived.

9.       REQUIRED REGULATORY PROVISIONS.
         -------------------------------

         (a) The Board of Directors may terminate the Executive's employment at
     any  time,  but any  termination  by the  Board of  Directors,  other  than
     Termination  for  Cause,  shall  not  prejudice  the  Executive's  right to
     compensation  or other benefits under this  Agreement.  The Executive shall
     not have the right to receive compensation or other benefits for any period
     after Termination for Cause as defined in Section 3 hereinabove.

         (b) If the  Executive  is  suspended  from office  and/or  temporarily
     prohibited  from  participating  in the conduct of the Bank's  affairs by a
     notice served under Section 8(e)(3) (12) U.S.C. ss. 1818(e)(3)) or 8(g) (12
     U.S.C. ss. 1818(g)) of the Federal Deposit Insurance Act, as amended by the
     financial  Institutions  Reform,  Recovery and Enforcement Act of 1989, the
     Bank's obligations under this contract shall be suspended as of the date of
     service,  unless stayed by appropriate  proceedings.  If the charges in the
     notice are dismissed,  the Bank may in its discretion (i) pay the Executive
     all or part of the compensation  withheld while their contract  obligations
     were  suspended  and  (ii)  reinstate  (in  whole  or in  part)  any of the
     obligations which were suspended.

         (c) If the Executive is removed  and/or  permanently  prohibited  from
     participating in the conduct of the Bank's affairs by an order issued under
     Section 8(e) (12 U.S.C. ss. 1818(e)) or 8(g) (12 U.S.C. ss. 1818(g)) of the
     Federal  Deposit  Insurance  Act, as mended by the  financial  Institutions
     Reform,  Recovery and  Enforcement Act of 1989, all obligations of the Bank
     under this contract shall  terminate as of the effective date of the order,
     but vested rights of the contracting parties shall not be affected.

         (d) If  the  Bank  is in  default  as  defined  in  section  3(x)  (12
     U.S.C.ss.1813(x)(1)) of the Federal Deposit Insurance Act, as mended by the
     Financial  Institutions  Reform,  Recovery and Enforcement Act of 1989, all
     obligations of the Bank under this contract shall  terminate as of the date
     of default,  but this  paragraph  shall not affect any vested rights of the
     contracting parties.

         (e) All obligations under this contract shall be terminated, except to
     the extent  determined  that  continuation of the contract is necessary for
     the  continued  operation  of the  institution:  (i) by the Director of the
     Office  of  Thrift  Supervision  (or his or her  designee)  at the time the
     Federal Deposit  Insurance  Corporation or the Resolution Trust Corporation
     enters into an agreement to provide  assistance to or on behalf of the Bank
     under the  authority  contained  in Section  13(c) of the  Federal  Deposit
     Insurance Act; or (ii) by the Director of the Office of Thrift  Supervision
     (or his or her  designee) at the time the Director (or his or her designee)
     approves a supervisory  merger to resolve  problems related to operation of
     the Bank or when the Bank is  determined by the Director to be in an unsafe
     or unsound  condition.  Any rights of the parties that have already vested,
     however, shall not be affected by such action.

10.      REINSTATEMENT OF BENEFITS UNDER SECTION 9(b).
        ---------------------------------------------

          In the event the Executive is suspended and/or temporarily  prohibited
     from  participating  in the  conduct  of the  Bank's  affairs  by a  notice
     described  in section 9(b) hereof (the  "Notice")  during the terms of this
     Agreement and a Change in control, as defined herein, occurs, the Bank will
     assume its  obligation to pay and the Executive will be entitled to receive
     all of the  termination  benefits  provided  for  under  Section  4 of this
     Agreement upon the Bank's receipt of a dismissal of charges in the Notice.

11.      SEVERABILITY.
         -------------

          If, for any reason,  any provision of this  Agreement,  or any part of
     any provision,  is held invalid, such invalidity shall not affect any other
     provision  of this  Agreement  or any  part of such  provision  not held so
     invalid,  and each such other  provision and part thereof shall to the full
     extent consistent with law continue in full force and effect.


12.      HEADINGS FOR REFERENCE ONLY.
         ----------------------------

          The headings of sections and paragraphs herein are included solely for
     convenience   of   reference   and  shall  not   control   the  meaning  or
     interpretation of any of the provisions of this Agreement.

13.      GOVERNING LAW.
         --------------

          The validity,  interpretation,  performance,  and  enforcement of this
     Agreement shall be governed by Florida law.

14.      ARBITRATION.
         ------------

         Any dispute or  controversy  arising under or in connection  with this
     Agreement  shall be settled  exclusively by arbitration in accordance  with
     the rules of the American Arbitration  Association then in effect. Judgment
     may be entered on the arbitrator's award in any court having  jurisdiction;
     provided,  however,  that the Executive  shall be entitled to seek specific
     performance  of his right to be paid until the Date of  Termination  during
     the pendency of any dispute or  controversy  arising under or in connection
     with this Agreement.

15.      PAYMENT OF COSTS AND LEGAL FEES.
         --------------------------------

         All reasonable  costs and legal fees paid or incurred by the Executive
     pursuant  to any dispute or  question  of  interpretation  relating to this
     Agreement  shall be paid or  reimbursed  by the Bank  (which  payments  are
     guaranteed  by the Company  pursuant to Section 6 hereof) if  Executive  is
     successful  on the merits  pursuant  to a legal  judgment,  arbitration  or
     settlement.


16.      SIGNATURES:
         -----------

          IN WITNESS  WHEREOF,  Harbor  Federal  Savings Bank and Harbor Florida
     Bancshares,  Inc. each has caused this Agreement to be executed by its duly
     authorized  officers,  and Executive has signed this  Agreement,  as of the
     19th day of October, 2002.


ATTEST:                                     HARBOR FEDERAL SAVINGS BANK


       /s/                                                 /s/
__________________________               BY: __________________________________
Toni Santiuste                                  Michael J. Brown, Sr.

ATTEST:                                     HARBOR FLORIDA BANCSHARES, INC.



       /s/                                                 /s/
___________________________              BY: __________________________________
Toni Santiuste                                  Michael J. Brown

WITNESS:


       /s/                                                 /s/
___________________________              BY: __________________________________
Namcy Arledge                                   H. Michael Callahan